Computer Business Review

Ofcom test could force BT to raise broadband prices

Investigation could also mean BT cutting wholesale costs for other providers.

BT could be set for severe penalties if found to be unfairly dominating the broadband market by an Ofcom investigation, it has been revealed.

The watchdog has a set of proposals that will examine whether the difference between BT's wholesale and retail pricing of its 'superfast broadband' is small enough to amount to a "margin squeeze" on competitors, the Telegraph reported.

If this is the case, BT could be forced to raise its own prices or cut wholesale costs for its rivals, causing bill headaches for many of its customers.

The test will examine the effect that BT's offer of giving away its BT Sport channel with home broadband subscriptions has had on the market. The move, which was the result of a multi-billion pound investment from BT, will be the subject of an estimate test from Ofcom which will examine BT's own retail profitability in giving away the service, which includes live Premier League football, free of charge.

BT has declined to comment on the test.

The news marks the second time in two months when BT has come under scrutiny from Ofcom. Last month, the company announced it would be hiring 1,600 more engineers following severe criticism from the watchdog concerning unrepaired faults and slow internet installation.

Under new guidelines, the company will face penalties if faulty lines are not repaired within two working days and the installation of new lines is not completed within 12 working days, Ofcom revealed.

In April, BT was also criticised over its supposed monopoly of the rural broadband market by the UK Public Accounts Committee (PAC), which called out the UK government for allegedly failing to encourage competition towards the company when bidding for a £1.2bn network procurement deal.

According to the watchdog's report, the company had been awarded all the contracts to extend faster internet connections to areas that are not considered commercially viable.